An organization has decided to use an external auditor to review the control environment of an outsourced service provider. The BEST control criteria to evaluate the provider would be based on:
Answer(s): A
The best control criteria to evaluate the outsourced service provider would be based on a recognized industry control framework. A control framework is a set of best practices, guidelines, and methodologies that provide a comprehensive and consistent approach to designing, implementing, and assessing controls. A recognized industry control framework is a control framework that is widely accepted and adopted by the industry and the regulators, and that reflects the current and emerging standards andexpectations for the control environment. A recognized industry control framework can help to ensure that the outsourced service provider meets the minimum and acceptable level of control quality and effectiveness, and that the control evaluation is objective, reliable, and comparable. The other options are not as good as a recognized industry control framework, as they are related to the specific sources, aspects, or requirements of the control criteria, not the overall structure and quality of the control criteria. References = Risk and Information Systems Control Study Manual, Chapter 2: IT Risk Assessment, Section 2.3: IT Control Assessment, page 69.
An organization is analyzing the risk of shadow IT usage. Which of the following is the MOST important input into the assessment?
Answer(s): C
The most important input into the assessment of the risk of shadow IT usage is the classification of the data that is being processed, stored, or transmitted by the unauthorized applications or devices. This determines the level of confidentiality, integrity, and availability that is required for the data and the potential impact of a breach or loss. Business benefits of shadow IT, application-related expenses, and volume of data are less important inputs that may affect the risk analysis, but not as much as the data classification. References = Risk IT Framework, 2nd Edition, page 28; CRISC Review Manual, 6th Edition, page 98.
Which of the following is the PRIMARY consideration when establishing an organization's risk management methodology?
The primary consideration when establishing an organization's risk management methodology is the business context, which includes the internal and external factors that influence the organization's objectives, strategies, scope, and boundaries. The business context helps to define the risk criteria, the risk appetite, the risk identification, the risk analysis, and the risk treatment. The other options are not the primary consideration, but rather the outcomes or inputs of the risk management methodology. References = ISO 31000 Risk Management Principles andGuidelines; ISO 31000 Principles of Risk Management; The risk management process: What is the best structure and administration?
Establishing and organizational code of conduct is an example of which type of control?
Answer(s): B
According to the CRISC Review Manual (Digital Version), establishing an organizational code of conduct is an example of a directive control, which is a type of control that guides or steers the behavior of individuals or processes to achieve desired outcomes. A directive control aims toinfluence or encourage compliance with the organization's policies, standards, procedures, and guidelines. A directive control can also communicate the organization's values, ethics, and expectations to its stakeholders. A directive control can take various forms, such as:Codes of conduct or ethicsPolicies or manualsTraining or awareness programsJob descriptions or roles and responsibilitiesPerformance appraisals or incentivesSupervision or oversightReferences = CRISC Review Manual (Digital Version), Chapter 2: IT Risk Assessment, Section 2.4: IT Risk Scenarios, pp. 105-1061
To reduce costs, an organization is combining the second and third tines of defense in a new department that reports to a recently appointed C-level executive. Which of the following is the GREATEST concern with this situation?
The greatest concern with the situation of combining the second and third lines of defense in a new department that reports to a recently appointed C-level executive is that the independence of the internal third line of defense may be compromised. The second line of defense is the function that oversees and supports the risk management activities of the first line of defense, which is the function that owns and manages the risks. The third line of defense is the function that provides independent assurance of the risk management activities, such as the internal audit function. Combining the second and third lines of defense in a new department may compromise the independence of the internal third line of defense, as it may create a conflict of interest, bias, or influence among the functions, and impair the objectivity, credibility, and quality of the assurance activities. The independence of the internal third line of defense is essential for ensuring that the risk management activities are performed in a consistent and effective manner, and that the issues and gaps are identified and reported without fear or favor. The risk governanceapproach of the second and third lines of defense may differ, cost reductions may negatively impact the productivity of other departments, and the new structure may not be aligned to the organization's internal control framework are also concerns, but they are not as great as the compromise of the independence of the internal third line of defense, as they do not directly affect the assurance and accountability of the risk management activities. References = CRISC Review Manual, 6th Edition, ISACA, 2015, page 36.
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